Pipeline from Canada Trickles Down to Georgia


Benita M. Dodd, Vice President, Georgia Public Policy Foundation

Benita M. Dodd, Vice President, Georgia Public Policy Foundation

By Benita M. Dodd

Choosing between energy independence and energy security is like choosing between cherry pie and pie-in-the-sky: Only one is real. A 1,700-mile planned oil pipeline from Canada to Texas could bring security to this nation’s oil supply, but environmental activists and (more recently) “Occupy” types pushing for pie-in-the-sky independence from fossil fuel energy are doing everything they can to deny Americans energy security.

The $7 billion Keystone XL pipeline would carry more than a half-million barrels of oil a day from the oil sands of Alberta, Canada, across several U.S. states to U.S. refineries in the Gulf.  It holds enormous promise for the United States, which imports about half of its oil. First, the Canadian-financed pipeline assures a petroleum supply to the United States from our closest ally and largest source of oil imports (25 percent). Second, higher oil imports from Canada, most of which would come from the oil sands, could eliminate U.S. dependence on imports from foreign suppliers such as Nigeria, Russia, Venezuela and Libya by 2030, according to a study commissioned by the U.S. Department of Energy.

Here’s the problem. Because the pipeline being built by TransCanada Corp. crosses international boundaries, the U.S. State Department must give a Presidential Permit for construction.  It had promised a decision by year’s end, but Thursday (November 10) came reports that the Obama administration would withhold approval pending consideration of alternative routes. That would punt the decision about 18 months ahead –  after the 2012 elections.

To be sure, any delay by the president is not about the economics, the environment or the route. The job projections have been done, and the United States is set to reap great benefits amid an economy struggling to recover. According to the Canadian Energy Research Institute, it would create as many as 435,000 jobs in this country by 2035. Of those, 20,000 would be in construction of the pipeline.

A three-year, 1,000-page environmental impact study on the project found that the pipeline would have “limited adverse environmental impact.” The company also agreed to 57 conditions “that go above and beyond the safety requirements of other pipelines.”

But this is a political Catch 22 for the president. On the one hand, Keystone XL has become a rallying point for environmentalist opponents who expect his administration to be “green,” reducing carbon emissions and fossil fuel use to minimize climate change. The development of the fields destroys their “peak oil” argument that the world is running out of oil and government must force Americans toward “renewable” alternative sources. Nor do environmental activists like what they have called the State Department’s “pro pipeline bias;” they expect government to have an adversarial relationship with “greedy oil corporations.”

On the other hand, union workers see construction jobs withering on the vine if the administration opposes the project. Unions direct huge amounts of campaign funds and votes to Democratic candidates. Obama can’t afford to alienate either side before the 2012 election.

So while the administration fiddles, the United States could miss an opportunity to secure a reliable source of fuel from a friendly – and stable – nation. The job growth will go elsewhere, because U.S. inaction will not halt the oil extraction. The oil will go elsewhere; all indications are it will be welcomed in China. The explosion in the Chinese economy has increased that nation’s fuel needs; in fact, Chinese investment in developing Canada’s oil sands totals 31 percent of foreign investment, closely behind the United States’ 34 percent investment.

Georgia’s largest international trade destination is Canada, with almost 20 percent of foreign-bound goods going to Canada. The trade relationship with Canada supports 249,000 Georgia jobs and, according to the Canadian Consulate in Atlanta, “a number of Georgia companies are providing goods and services to oil sands companies.”  They are among about 1,000 U.S. companies supplying Canada’s oil sands sector. Aside from the construction jobs, the ongoing success of Keystone XL is sure to translate into job growth and economic expansion in these Georgia companies.

The administration has faced scandals recently over wasted funds toward pie-in-the-sky efforts at energy independence. It has an opportunity now to promote energy security and economic growth with ample environmental protection. This is not a vague concept but a thoughtful process behind a profitable project that benefits the nation and Georgians. Keystone XL deserves a positive reception as soon as possible, not more politics as usual.

Benita M. Dodd is vice president of the Georgia Public Policy Foundation, an independent think tank that proposes practical, market-oriented approaches to public policy to improve the lives of Georgians. Nothing written here is to be construed as necessarily reflecting the views of the Georgia Public Policy Foundation or as an attempt to aid or hinder the passage of any bill before the U.S. Congress or the Georgia Legislature.

© Georgia Public Policy Foundation (November 11, 2011). Permission to reprint in whole or in part is hereby granted, provided the author and her affiliations are cited.

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